Most people don’t realize they’re overpaying for Medicare until the bill lands and they’re already locked in for the year.

I’ve sat across from hundreds of people in that exact spot. Retired schoolteachers, factory workers, small business owners, all of them smart, capable people who simply didn’t know what they didn’t know. And the thing that gets me every time is that the savings were almost always right there, waiting. Not buried in some loophole, not requiring a lawyer. Just a combination of programs, timing decisions, and plan choices that nobody had ever walked them through.

So let’s do that now.

Understanding Why Medicare Costs So Much in the First Place

You might be wondering whether Medicare is even supposed to be expensive. Isn’t it the government health program for seniors? Shouldn’t it be mostly covered?

Here’s the honest answer: Medicare covers a lot, but it was never designed to cover everything. Original Medicare, meaning Part A (hospital insurance) and Part B (medical insurance), has premiums, deductibles, and coinsurance that can add up fast. As of 2026, the standard Part B premium is around $185 per month, but higher earners pay significantly more through what’s called IRMAA (Income-Related Monthly Adjustment Amount). Add a Part D (prescription drug) plan, maybe a Medigap (Medicare Supplement) policy, and you can easily hit $400 to $600 a month before you’ve seen a single doctor.

That’s not a complaint about Medicare; I think it’s genuinely one of the most valuable programs ever created. But it does mean that “just signing up” without thinking strategically can cost you thousands of dollars a year that you didn’t need to spend.

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Before we talk about plan optimization or drug cost tricks, I want to make sure you haven’t missed something much bigger. There are federal and state programs specifically designed to reduce Medicare costs for people with limited income and resources, and they go dramatically underused. AARP estimates millions of eligible people aren’t enrolled.

The big one is the Extra Help program (also called the Low Income Subsidy, or LIS). It helps pay for Part D prescription drug costs, including premiums, deductibles, and copays. Depending on your income and assets, it could save you $2,000 or more annually on drug costs alone. You apply through Social Security at ssa.gov or call 1-800-772-1213.

There’s also the Medicare Savings Program (MSP), actually a group of four related programs, that can pay your Part B premium, deductibles, and copays if you meet income limits. The income thresholds are higher than most people expect, so don’t rule yourself out before you check. Your state Medicaid office handles enrollment.

Here’s a real scenario from my counseling work: A retired warehouse supervisor in his early 70s came to me convinced he made too much to qualify for anything. Single, about $1,600 per month in Social Security, modest savings. He’d been paying his $185 Part B premium and a $47/month Part D premium out of pocket. After I walked him through the MSP income limits in his state, he qualified for the Qualified Medicare Beneficiary (QMB) program. The result: his Part B premium was eliminated, saving him $2,220 a year, and his cost-sharing dropped to nearly zero. He’d been leaving that money on the table for three years.

The State Health Insurance Assistance Program (SHIP) can connect you with a free local counselor who’ll go through all of this with you at no charge. I genuinely can’t recommend SHIP enough. These are trained volunteers with no financial stake in what you choose.

Choosing the Right Coverage Is Where Most People Either Win or Lose

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This is where the real money is, and where I see the most mistakes.

A lot of people pick a Medicare Advantage plan (Part C) because the $0 premium is appealing. I understand that. But a $0 premium plan isn’t necessarily a $0 cost plan. Network restrictions, prior authorization requirements, and higher out-of-pocket limits can cost you far more than a modest premium would have, especially if you have a serious illness.

Conversely, some people buy the most expensive Medigap plan (Plan G is currently the most comprehensive for new enrollees) without doing the math on whether it makes sense for their health situation. If you’re relatively healthy and rarely use medical services, a lower-premium supplement or even a Medicare Advantage plan with good cost-sharing might save you money.

My honest take: do the math every single year during Open Enrollment (October 15 to December 7). Plans change. Your health changes. What was the right fit in 2023 might be costing you an extra $800 a year in 2026.

One worked example: A couple I know in their late 60s, both with controlled chronic conditions, were each on Medicare Advantage plans with $40 monthly premiums and decent networks. When I helped them compare plans during 2025 Open Enrollment, we found a competitor plan in their county with the same network, lower drug costs for their specific medications, and a $0 premium. They switched. Between the two of them, they saved about $960 per year in premiums, plus an estimated $600 in lower Part D copays. That’s $1,560 a year, just from taking two hours to compare.

Medicare.gov has a free plan comparison tool where you can enter your specific drugs and dosages. Use it. Every year.

Cutting Prescription Drug Costs Specifically

Drug costs deserve their own section because they’re often the biggest variable in someone’s Medicare spending, and there’s more room to maneuver here than most people realize.

First: make sure your Part D plan actually covers your drugs at the lowest tier possible. Drug formularies (the list of covered medications) change annually. Your pharmacist can run a coverage check. Your Part D plan is required to send you an Annual Notice of Change letter every fall; read it.

Second: ask about generic alternatives. I know that sounds obvious, but I’ve watched people pay $90 a month for a brand-name drug when a therapeutically equivalent generic was available for $4. Your doctor can often prescribe the generic if you ask directly.

Third: check GoodRx or similar discount programs. This surprises people, but sometimes paying cash with a discount card is cheaper than using your Part D coverage, particularly for common generics. You can’t use GoodRx and Part D for the same prescription at the same time, but you can choose which one to use at the counter.

Fourth: manufacturer patient assistance programs. If you’re on an expensive brand-name drug that has no generic, the manufacturer may have a program to reduce your out-of-pocket cost, even if you have Medicare. NeedyMeds.org is a good place to start searching. AARP’s Medicare resource center also maintains a helpful guide on drug cost reduction strategies.

The IRMAA Problem (And How to Fight It)

If your income is above a certain threshold, Medicare charges you more for Part B and Part D. This surcharge is called IRMAA (Income-Related Monthly Adjustment Amount), and it’s based on your tax return from two years prior. As of this year, if your modified adjusted gross income was above roughly $106,000 (single) or $212,000 (married filing jointly), you’re paying more than the standard premium.

Here’s what most people don’t know: you can appeal IRMAA if your income has dropped due to a qualifying life event. Retirement counts. Divorce counts. Death of a spouse counts. The form is SSA-44, available at ssa.gov, and in my experience it’s worth filing even if you’re not 100% sure you qualify. I’ve seen people get significant premium reductions retroactively.

One more thing: if a large Roth conversion or a property sale temporarily spiked your income two years ago, you may be paying a higher IRMAA surcharge now that doesn’t reflect your actual current situation. That’s worth a conversation with a financial advisor who understands Medicare.

Sources

This article is for informational purposes only. Medicare rules change annually. Always verify current plan details at Medicare.gov or by calling 1-800-MEDICARE (1-800-633-4227). This site does not sell insurance or recommend specific plans.

Disclosure: As an Amazon Associate, we earn a small commission from qualifying purchases at no extra cost to you. We only recommend products that genuinely support the topics covered in this article.

  • Medicare For Dummies (~$22), The definitive consumer guide to Medicare, enrollment windows, Part A/B/C/D, and supplement plans.
  • Get What’s Yours for Medicare (~$17), Maximize your Medicare benefits and minimize out-of-pocket costs. Covers Part D drug coverage gaps and Medigap in depth.